Still no Plant Washington under construction... hopefully there never will be.

In yet another indication that the proposed coal-fired Plant Washington is not viable, developer Dean Alford told plant supporters at a meeting on September 16 that he is asking Georgia’s Environmental Protection Division (EPD) for an extension of the plant’s construction deadline.

More importantly, he told WMAZ TV news that a revised federal greenhouse gas limit anticipated for release by the Environmental Protection agency (EPA) on Friday, which may require new plants to use expensive carbon capture technology, could “make the project move forward, it could slow it down, or it could bring it to a halt.”

The meeting seems at first like a desperate attempt to shore up Alford’s remaining supporters with optimism about a possible permit extension, and preserve options to build the doomed plant. We believe, however, that the primary intention behind the meeting was actually to discuss the carbon limit rule, thus setting the stage to blame the Obama administration’s EPA when Alford finally throws in the towel on Plant Washington. Indeed, the plant is not designed to capture its carbon emissions and could not meet a regulation requiring it to do so.Focusing at all on EPA’s carbon limits as the deciding factor in Plant Washington’s future is somewhat misleading. In reality, the plant is already floundering due to increased competition from cleaner renewables and natural gas, and construction costs that have doubled or tripled since it was proposed in 2008 (see the example of one canceled plant, at right). Most similar proposals around the country are now canceled, and one plant that began operations is now charging above market prices to communities that are locked into buying its electricity. Two other new plant proposals were recently canceled in Georgia.

In addition, funding is thin for Plant Washington, a fact that doubtlessly plays a part in the construction delays leading to the extension request. Five of the rural utility co-ops that originally funded the endeavor wisely dropped out, the first four in 2009 and the fifth (and original leader) in January 2012. The remaining four ceased funding for the project in summer 2012, leaving only one private investor, Taylor Energy Fund out of Colorado, backing the project publicly, to the tune of $2 million. That’s far short of the $2 billion original construction cost projection, and even farther short of the $4 billion price tag predicted by analysts.

The original construction deadline in the air emission permit EPD awarded in spring of 2012 would require “commencing a continuous program of physical construction” this fall. Alford’s announcement indicates that he is now asking the state regulators for an 18-month extension on this original deadline. By requesting the EPD permit extension, Alford acknowledges that Plant Washington cannot meet its original schedule.

It is possible that the New Source Performance Standards for carbon dioxide, anticipated for release on Friday, will be the final straw that takes Plant Washington from “delayed” to “canceled”. Despite his acknowledgement that there is no equipment at the site moving dirt, pouring concrete, or installing plant components, Alford seems to hold out hope that he can make the case that the plant should not be regulated as “new” and should instead be subject to the standards for “existing” sources expected from EPA next year. His argument hinges on the way EPA defines “commencing construction,” in this context, differently than EPD.

One precedent for determining whether a plant in progress still qualifies as “new” (i.e. has not commenced construction) and is therefore subject to New Source Performance Standards, is if the plant developer commits substantial resources by signing a contract to purchase a boiler, a roughly $300-400 million piece of equipment that must be custom made. The penalty for canceling such a contract is usually 10-20% of the total price ($30-80 million). Plant Washington did execute a boiler contract, but given that only $2 million has been publicly committed to the project, it is unclear that this particular contract represents sufficiently substantial commitment.

On Friday, Sept. 20, we’ll learn more about how EPA will distinguish “new” versus “existing” sources of carbon dioxide. The debate about which category Plant Washington belongs in is likely, in any case, to prolong and increase uncertainty about the cost and ultimate viability of the plant, but the bottom line is that Plant Washington will have to meet carbon standards. Please tune in on Friday as we will be tracking the EPA announcement closely and keeping you updated on its implications for Plant Washington.

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